Ontario mining companies already under pressure from sagging metal prices are preparing to pay more for electricity after Ontario Hydro announced that it will increase its rates by an average of 11.8% next year.
Falconbridge, which spent $82 million in 1990 to power its Sudbury and Timmins operations, expects the rate increase to add $8-9 million to its annual electricity bill.
Similar increases are anticipated by Toronto-based Inco (TSE), Ontario Hydro’s second biggest power user behind Falconbridge.
Hydro Chairman Marc Eliesen said the increase is needed to refurbish the province’s aging electricity system and to bring the Darlington nuclear generating station into service.
“Darlington will cost us about $13.5 billion,” said Eliesen. “As it starts to produce electricity, we have to start paying for it through our customers’ rates.”
But big power users, some of whom have already spent millions to conserve energy within their own operations, are opposed to the rate increases. “It could be extremely damaging to the future industrial base of this province,” said Arthur Dickenson, executive director of the Association of Major Power Consumers in Ontario (AMCO).
“At a time when the economy is weak, this increase will be a major blow to the operating effectiveness of power users,” said Dickenson who estimates that it could add 1-9% to the company’s production costs.
When Hydro announced its last increases in 1990, mining companies said they could live with them as long as the provincial utility could guarantee them a reliable power supply. But the moratorium of Ontario’s New Democrats on the development of nuclear power stations and rising demand for electricity within the province have raised major doubts about Hydro’s ability to guarantee future supply.
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